Comments on Feb. 23, 2022 meeting presentation and discussion

1. Please provide your organizations openness towards a market option for an EIM Entity to elect to utilize supply that has been voluntarily-offered in the EIM, above the imbalance needs of the resource sufficient EIM Entities, to cure real-time energy emergencies.

APS is open to the idea of a market enhancement that facilitates or promotes additional reliability to the EIM footprint in limited and infrequent circumstances. However, the access to this supply must not disincentivize entities from procuring adequate supply ahead of the EIM.

APS believes that entities that have passed the resource sufficiency test should be able to utilize the EIM to cure real-time shortfalls ahead of an entity that has failed. If an entity has failed the resource sufficiency evaluation, the market should protect other participants from experiencing shortfalls due to the entity that was resource insufficient. This is an important element to the design and should be discussed with varying scenarios that could play out in the market. A program of this kind would need to produce the appropriate outcomes in scenarios where the footprint is sufficient to cure real-time energy emergencies and when the footprint cannot cure the real-time emergency of an entity who failed the resource sufficiency evaluation.

APS would also request to have monitoring and reporting of these events by the DMM. If an entity were to utilize EIM to cure real-time energy emergencies, it should be tracked and discussed as part of the on-going reporting function on resource sufficiency evaluation by DMM.

APS does recognize that the EIM can operationally provide benefits to forestall real-time energy emergencies in real-time. EIM includes automated processes and information that can respond quicker and more efficiently to these emergencies than outside market actions. Although EIM can facilitate this reliability function it is important to recall that EIM was not created to serve this purpose and fundamentally changes the function of EIM from a purely economic optimization.

2. Please provide your organizations perspective on implementing financial consequences in the form of a hurdle rate, including any benefits or drawbacks from embedding these costs in an LMP.

APS would like further discussion on if the settlement of a program to cure real-time energy emergencies should be done through scarcity pricing reflected in the LMP or be done outside of the market clearing price. APS believes that transparency in price formation is the best market design principle and would like to understand how the reflection of a deficient entity would impact other entities’ prices within the EIM footprint.

3. Please provide your organizations perspective on relaxing EIM transfer limitations and applying an after-the-fact charge to incremental transfers, including any benefits or drawbacks from this method of implementation.

See response to #2. APS would like to better understand the pros and cons of the settlement through LMP or after-the-fact to make an informed conclusion on preference.

4. Please provide your organization’s comments on the concept of creating a backstop that triggers automatic failure of the RSE when preset conditions are met. To the extent that your organization agrees please provide comment on the viability of the following options:

APS believes that the ideal solution would be a resource sufficiency test that identifies failures ahead of any backstop criteria that is being considered is triggered. If there remain instances where the resource sufficiency test produces false positives, and an entity can be either in an energy emergency or utilizing firm load to maintain contingency reserves while passing the resource sufficiency evaluation then a backstop is appropriate. Further analysis of false negatives and false positives during the Phase 1b could help inform if changes implemented, or to be implemented, have worked to reduce the volume of inaccurate results since August 2020.

5. The revised draft finals proposal to create a backstop based on agreed upon emergency operator actions that correspond to resource insufficiency.

APS sees flaws in the ability for operators to implement this solution, particularly if it applies equally to all EIM Entities since each entity may take different actions at different points in time.

6. The concept of utilizing the NERC EEA classifications as pre-defined metrics:

a. The potential benefits, and drawbacks of utilizing a NERC EEA 2 as the threshold. b. The potential benefits, and drawbacks of utilizing a NERC EEA 3 as the threshold.

APS sees the use of a NERC defined EEA as clearly drawing an equitable line that all EIM entities are familiar with in terms of criteria. It doesn’t leave subjectivity and is more transparent with respect to when it would be used as a backstop. APS understands that certain actions with contracted resources may be taken in an EEA 2 that could represent an EIM entities plan to meet its load obligations on its own. APS is indifferent if the trigger is set at EEA 2 or EEA 3 for this reason.

7. Please provide additional comments on the WEIM Resource Sufficiency Evaluation Enhancements Phase 1 Emergency Actions Criteria Workshop not mentioned above.

APS, like many other entities across the west, has a long track record of cooperating with and assisting BAAs facing reliability challenges, including via deliveries of last-minute residual supply. APS does not believe it is appropriate to require an EIM Entity to experience reliability events that are otherwise avoidable through the delivery of voluntary, residual supply. At the same time, APS believes the Western EIM is untenable if the expectation of access to supply in real-time undermines incentives for EIM Entities (and/or load-serving entities in their applicable BAA) to arrange for sufficient resources prior to the EIM timeframe.   

1. Please provide your organizations openness towards a market option for an EIM Entity to elect to utilize supply that has been voluntarily-offered in the EIM, above the imbalance needs of the resource sufficient EIM Entities, to cure real-time energy emergencies.

See attached

2. Please provide your organizations perspective on implementing financial consequences in the form of a hurdle rate, including any benefits or drawbacks from embedding these costs in an LMP.

See attached

3. Please provide your organizations perspective on relaxing EIM transfer limitations and applying an after-the-fact charge to incremental transfers, including any benefits or drawbacks from this method of implementation.

See attached

4. Please provide your organization’s comments on the concept of creating a backstop that triggers automatic failure of the RSE when preset conditions are met. To the extent that your organization agrees please provide comment on the viability of the following options:

See attached

5. The revised draft finals proposal to create a backstop based on agreed upon emergency operator actions that correspond to resource insufficiency.

See attached

6. The concept of utilizing the NERC EEA classifications as pre-defined metrics:

a. The potential benefits, and drawbacks of utilizing a NERC EEA 2 as the threshold. b. The potential benefits, and drawbacks of utilizing a NERC EEA 3 as the threshold.

See attached

7. Please provide additional comments on the WEIM Resource Sufficiency Evaluation Enhancements Phase 1 Emergency Actions Criteria Workshop not mentioned above.

See attached

1. Please provide your organizations openness towards a market option for an EIM Entity to elect to utilize supply that has been voluntarily-offered in the EIM, above the imbalance needs of the resource sufficient EIM Entities, to cure real-time energy emergencies.

2. Please provide your organizations perspective on implementing financial consequences in the form of a hurdle rate, including any benefits or drawbacks from embedding these costs in an LMP.

3. Please provide your organizations perspective on relaxing EIM transfer limitations and applying an after-the-fact charge to incremental transfers, including any benefits or drawbacks from this method of implementation.

4. Please provide your organization’s comments on the concept of creating a backstop that triggers automatic failure of the RSE when preset conditions are met. To the extent that your organization agrees please provide comment on the viability of the following options:

5. The revised draft finals proposal to create a backstop based on agreed upon emergency operator actions that correspond to resource insufficiency.

6. The concept of utilizing the NERC EEA classifications as pre-defined metrics:

a. The potential benefits, and drawbacks of utilizing a NERC EEA 2 as the threshold. b. The potential benefits, and drawbacks of utilizing a NERC EEA 3 as the threshold.

7. Please provide additional comments on the WEIM Resource Sufficiency Evaluation Enhancements Phase 1 Emergency Actions Criteria Workshop not mentioned above.

1. Please provide your organizations openness towards a market option for an EIM Entity to elect to utilize supply that has been voluntarily-offered in the EIM, above the imbalance needs of the resource sufficient EIM Entities, to cure real-time energy emergencies.

Summary of PG&E comments:

PG&E appreciates the opportunity to comment on the WEIM Resource Sufficiency Evaluation Enhancements February 23, 2022 workshop.  PG&E summarizes its comments as the following:

• PG&E is willing to consider options to offer support to BAAs in emergency conditions through the EIM and pursue some of the items discussed at the workshop for longer term solutions.

• PG&E opposes any new emergency action for the EIM in Summer 2022. Changing the real-time market at this point in time for Summer 2022 is impractical and risky.

• Long-term solutions to allow the EIM to provide energy in emergencies should be considered as part of the standard stakeholder process in Phase 2 of this initiative.

PG&E opposes any new emergency actions programs for the EIM in Summer 2022

While PG&E is open to exploring options for emergency energy to be provided through the EIM, PG&E opposes implementing a new emergency actions program for the EIM before this summer.  The EIM has the potential to be a more efficient and reliable mechanism to cure energy emergencies than bilateral transactions or operator actions.  However, new EIM processes to cure energy emergencies could change the fundamental purpose of the EIM and require significant changes to other processes in the Real-Time Market, such as how contingency supply is dispatched.

While it is impractical and risky to implement new changes prior to this summer, PG&E supports considering options for long-term solutions to improve the ability of the EIM to support BAAs in emergency conditions as part of Phase 2 of this initiative. 

2. Please provide your organizations perspective on implementing financial consequences in the form of a hurdle rate, including any benefits or drawbacks from embedding these costs in an LMP.

Implementing financial consequences may constitute a new scarcity pricing program for the RTM that should not be implemented in Summer of 2022

Implementing financial consequences that are embedded in the LMPs is likely more efficient than using bilateral markets or operator actions to procure emergency energy.  However, such policy changes should be carefully weighed, and PG&E does not believe there is enough time to fully develop and implement a new scarcity pricing program for the EIM before this summer.  As stated in question 1, PG&E welcomes further discussion in Phase 2 of this initiative of long-term solutions to improve the ability of the EIM to offer support to BAAs in emergency conditions.

3. Please provide your organizations perspective on relaxing EIM transfer limitations and applying an after-the-fact charge to incremental transfers, including any benefits or drawbacks from this method of implementation.

Relaxing the EIM transfer limitations must not expose other EIM BAAs to economic or operational risks

While PG&E supports exploring changes to the current transfer limitations in Phase 2, relaxing the EIM transfer limitations without appropriate consequences for RSE failure has the potential to allow excessive leaning that could harm other BAAs in the EIM.  In evaluating an after-the fact charge, some of the key details that must be considered include 1) the price of the charge, 2) ensuring the charges compensate the appropriate suppliers, and 3) differentiating between emergency and non-emergency scenarios.  Such a policy change would require careful accounting of the impacts to ensure that the EIM does not permit intentional and inappropriate leaning that harms other BAAs economically or operationally. 

4. Please provide your organization’s comments on the concept of creating a backstop that triggers automatic failure of the RSE when preset conditions are met. To the extent that your organization agrees please provide comment on the viability of the following options:

5. The revised draft finals proposal to create a backstop based on agreed upon emergency operator actions that correspond to resource insufficiency.

PG&E opposes the concept of a backstop to trigger automatic RSE failures

As stated in PG&E’s previous comments[1], PG&E opposes the Revised Draft Final proposal to trigger an automatic failure of the RSE when operators arm load or direct voltage reductions for the purpose of reducing power consumption.  This approach seemed to allow for different standards to be applied to different balancing areas, rather than common criteria that could be applied evenly across the EIM footprint.

Regardless of the trigger, PG&E believes a backstop to trigger an automatic RSE failure would be a move in the wrong direction at this time.  Adding a backstop trigger could exacerbate reliability challenges when a BAA may not necessarily be resource insufficient, but may enter emergency conditions for a range of reasons beyond their control – such as transmission outages or other unexpected disruptions.  PG&E supports further discussion of long-term solutions in Phase 2 of this initiative to ensure that the RSE does not continue to artificially limit the amount of transfers available to EIM entities during emergencies when excess supply is otherwise available and other BAAs can be held harmless.

[1] Pacific Gas & Electric comments on revised draft final proposal. WEIM resource sufficiency evaluation enhancements.  Jan 10, 2022.  https://stakeholdercenter.caiso.com/Comments/AllComments/5293f8fd-ab86-47ea-9168-3ed6dd8b8a68#org-81377cd6-f2f5-459d-ad58-70981133deb8

6. The concept of utilizing the NERC EEA classifications as pre-defined metrics:

a. The potential benefits, and drawbacks of utilizing a NERC EEA 2 as the threshold. b. The potential benefits, and drawbacks of utilizing a NERC EEA 3 as the threshold.

PG&E opposes the concept of a backstop to trigger automatic RSE failures

As noted in our comments to question #5, PG&E believes a backstop to trigger RSE failure would be a move in the wrong direction.  Adding a backstop trigger could exacerbate reliability challenges when a BAA may not necessarily be resource insufficient, but may enter emergency conditions for a range of reasons beyond their control – such as transmission outages or other unexpected disruptions.  PG&E supports further discussion of long-term solutions in Phase 2 of this initiative to ensure that the RSE does not continue to artificially limit the amount of transfers available to EIM entities during emergencies when excess supply is otherwise available and other BAAs can be held harmless.

7. Please provide additional comments on the WEIM Resource Sufficiency Evaluation Enhancements Phase 1 Emergency Actions Criteria Workshop not mentioned above.

1. Please provide your organizations openness towards a market option for an EIM Entity to elect to utilize supply that has been voluntarily-offered in the EIM, above the imbalance needs of the resource sufficient EIM Entities, to cure real-time energy emergencies.

Portland General Electric Company (“PGE”) is open to exploring the option for an EIM Entity to elect to utilize supply that has been voluntarily offered in the EIM, above the imbalance needs of the resource sufficient EIM Entities, to cure RT energy emergencies.  To this end, we also support exploring the interim proposal that NV Energy (“NVE”) has circulated regarding a Residual Emergency Energy Service (“REES”).  However, NVE has introduced their proposal as an alternative to leveraging the bilateral market to respond to reliability challenges and has made some initial assumptions about how their proposal could be utilized that requires additional examination. 

For instance, no distinction has been made regarding situations in which an entity has failed (or foresees that it will fail) the ramping and capacity UP test or when an entity is actively experiencing an emergency event.  Moreover, an “emergency event” remains undefined.  As such, the timing of when the REES option would be utilized in those scenarios seems unclear (and potentially conflicting).  Additionally, if NVE anticipates utilizing the REES option before the T-40 test so it can be treated similarly to a call-option (or bilateral transaction), then the option would need to happen before an entity has failed the test when an operator can foresee that there isn’t enough capacity to serve load in the next hour.  In this scenario, NVE would be seeking an out-of-market settlement.  However, if NVE envisions utilizing the REES option in real-time using BAAOP to seek assistance from neighboring EIM Entities through additional incremental transfers, then it’s unclear to PGE how NVE could utilize CAISO’s existing market construct without also impacting how LMPs are calculated for other entities.  Finally, this proposal has been introduced as an interim option that would be implemented by Summer 2022.  PGE would like confirmation from CAISO that NVE’s proposal (as introduced) is implementable by this target date. 

2. Please provide your organizations perspective on implementing financial consequences in the form of a hurdle rate, including any benefits or drawbacks from embedding these costs in an LMP.

PGE has no comment at this time.

3. Please provide your organizations perspective on relaxing EIM transfer limitations and applying an after-the-fact charge to incremental transfers, including any benefits or drawbacks from this method of implementation.

PGE has no comment at this time.  

4. Please provide your organization’s comments on the concept of creating a backstop that triggers automatic failure of the RSE when preset conditions are met. To the extent that your organization agrees please provide comment on the viability of the following options:

See response under Question 6.

5. The revised draft finals proposal to create a backstop based on agreed upon emergency operator actions that correspond to resource insufficiency.

PGE opposes the use of a backstop based on “agreed upon emergency operator actions” as this concept is too dependent upon individual BAA/Operator circumstance and lacks standardization.  Any backstop program that isn’t standardized in its application has the potential to be error-prone. 

6. The concept of utilizing the NERC EEA classifications as pre-defined metrics:

a. The potential benefits, and drawbacks of utilizing a NERC EEA 2 as the threshold. b. The potential benefits, and drawbacks of utilizing a NERC EEA 3 as the threshold.

As PGE has indicated in past joint comments regarding the utilization of EEA classifications, EEA2 is a clear (regional) indication that a BA is no longer able to provide its expected energy requirements and is an energy-deficient BA.  PGE maintains that it is more appropriate to align a resource insufficiency “trigger” with an expected energy-deficient condition than with a condition where an EIM Entity has already found itself actively shedding load.  However, an important component that has been missing from this discussion is the fact that the RSE is looking at a period that is forward-looking (40-100 minutes in the future) while the declaration of an EEA occurs in real-time.  As such, CAISO needs to provide more detailed feedback on how the implementation of an RSE auto-failure that results from an EEA classification would be structured via detailed examples that walk through a sequence of emergency action events.  If there are hurdles associated with automation, those need to be explored through this working group.  Conversely, if the process is entirely manual then it could place unnecessary burdens on operators and may increase the likelihood of errors.  

7. Please provide additional comments on the WEIM Resource Sufficiency Evaluation Enhancements Phase 1 Emergency Actions Criteria Workshop not mentioned above.

1. Please provide your organizations openness towards a market option for an EIM Entity to elect to utilize supply that has been voluntarily-offered in the EIM, above the imbalance needs of the resource sufficient EIM Entities, to cure real-time energy emergencies.

Please see Powerex’s comments available at: CAISO February 23 EIM RSE Emergency Action Workshop Comments 

2. Please provide your organizations perspective on implementing financial consequences in the form of a hurdle rate, including any benefits or drawbacks from embedding these costs in an LMP.

Please see Powerex’s comments available at: CAISO February 23 EIM RSE Emergency Action Workshop Comments 

3. Please provide your organizations perspective on relaxing EIM transfer limitations and applying an after-the-fact charge to incremental transfers, including any benefits or drawbacks from this method of implementation.

Please see Powerex’s comments available at: CAISO February 23 EIM RSE Emergency Action Workshop Comments 

4. Please provide your organization’s comments on the concept of creating a backstop that triggers automatic failure of the RSE when preset conditions are met. To the extent that your organization agrees please provide comment on the viability of the following options:

Please see Powerex’s comments available at: CAISO February 23 EIM RSE Emergency Action Workshop Comments 

5. The revised draft finals proposal to create a backstop based on agreed upon emergency operator actions that correspond to resource insufficiency.

Please see Powerex’s comments available at: CAISO February 23 EIM RSE Emergency Action Workshop Comments 

6. The concept of utilizing the NERC EEA classifications as pre-defined metrics:

a. The potential benefits, and drawbacks of utilizing a NERC EEA 2 as the threshold. b. The potential benefits, and drawbacks of utilizing a NERC EEA 3 as the threshold.

Please see Powerex’s comments available at: CAISO February 23 EIM RSE Emergency Action Workshop Comments 

7. Please provide additional comments on the WEIM Resource Sufficiency Evaluation Enhancements Phase 1 Emergency Actions Criteria Workshop not mentioned above.

Please see Powerex’s comments available at: CAISO February 23 EIM RSE Emergency Action Workshop Comments 

1. Please provide your organizations openness towards a market option for an EIM Entity to elect to utilize supply that has been voluntarily-offered in the EIM, above the imbalance needs of the resource sufficient EIM Entities, to cure real-time energy emergencies.

PGP supports the development of an interim market option that allows surplus supply in the EIM to cure real-time emergencies that should be in effect until Phase II of the RSE Enhancements initiative and the Scarcity Pricing initiatives are completed.  PGP is has reviewed a draft of NV Energy’s REES proposal and supports the concepts in this proposal. 

2. Please provide your organizations perspective on implementing financial consequences in the form of a hurdle rate, including any benefits or drawbacks from embedding these costs in an LMP.

PGP believes that applying financial consequences to the LMP should only be considered as part of Phase II of the RSE Enhancements, not as part of an interim solution.  The impacts of changing the LMP are very broad and warrant thoughtful discussion rather than rushed as part of an interim solution.

3. Please provide your organizations perspective on relaxing EIM transfer limitations and applying an after-the-fact charge to incremental transfers, including any benefits or drawbacks from this method of implementation.

Until Phase II of the RSE Enhancements initiative and the Scarcity Pricing initiatives are completed, PGP supports the approach of NV Energy’s REES proposal to only apply the financial consequences of incremental imports to EIM entities that are deficient.

4. Please provide your organization’s comments on the concept of creating a backstop that triggers automatic failure of the RSE when preset conditions are met. To the extent that your organization agrees please provide comment on the viability of the following options:

As PGP has previously commented, PGP agrees that there should be a mechanism that triggers automatic RSE failure when a market participant is in emergency conditions.  In comments to the straw proposal, PGP supported triggering RSE failure when an EEA is in effect, but CAISO indicated their desire to not link actions of the market operator with the actions of the Reliability Coordinator.  PGP agreed that keeping these functions independent is important and supported the Draft Final proposal to trigger RSE failure when load is being armed for reserves.  

However, CAISO indicated at the February 23^rd workshop that consideration of an EEA as a trigger for RSE failure is an option.  As such, PGP believes that using an EEA as the trigger is preferred to operator actions since it is more transparent and easier to implement for EIM market participants.  PGP also believes that an EEA-2 is the most appropriate threshold since the criteria for an EEA-2 make it clear that the entity is energy deficient.

5. The revised draft finals proposal to create a backstop based on agreed upon emergency operator actions that correspond to resource insufficiency.

6. The concept of utilizing the NERC EEA classifications as pre-defined metrics:

a. The potential benefits, and drawbacks of utilizing a NERC EEA 2 as the threshold. b. The potential benefits, and drawbacks of utilizing a NERC EEA 3 as the threshold.

7. Please provide additional comments on the WEIM Resource Sufficiency Evaluation Enhancements Phase 1 Emergency Actions Criteria Workshop not mentioned above.

The Public Generating Pool (PGP) thanks CAISO for maintaining the momentum on developing enhancements to the WEIM resource sufficiency evaluation and for providing PGP the opportunity to provide comments on the February 23^rd meeting.

1. Please provide your organizations openness towards a market option for an EIM Entity to elect to utilize supply that has been voluntarily-offered in the EIM, above the imbalance needs of the resource sufficient EIM Entities, to cure real-time energy emergencies.

2. Please provide your organizations perspective on implementing financial consequences in the form of a hurdle rate, including any benefits or drawbacks from embedding these costs in an LMP.

3. Please provide your organizations perspective on relaxing EIM transfer limitations and applying an after-the-fact charge to incremental transfers, including any benefits or drawbacks from this method of implementation.

4. Please provide your organization’s comments on the concept of creating a backstop that triggers automatic failure of the RSE when preset conditions are met. To the extent that your organization agrees please provide comment on the viability of the following options:

5. The revised draft finals proposal to create a backstop based on agreed upon emergency operator actions that correspond to resource insufficiency.

6. The concept of utilizing the NERC EEA classifications as pre-defined metrics:

a. The potential benefits, and drawbacks of utilizing a NERC EEA 2 as the threshold. b. The potential benefits, and drawbacks of utilizing a NERC EEA 3 as the threshold.

7. Please provide additional comments on the WEIM Resource Sufficiency Evaluation Enhancements Phase 1 Emergency Actions Criteria Workshop not mentioned above.

PPC appreciates CAISO coordinating a discussion among stakeholders on this issue.  PPC continues to be concerned about the potential for leaning in the EIM and will continue to participate in future phases of the RSE Enhancement discussions to seek long term solutions realted to the failure consequences of the RSE.  While this is best done in a robust and holistic process (which we anticipate will happen as part of Phase 2 discussions) we understand that some stakeholders are seeking an interim solution for this summer which would provide an alternative to freezing EIM transfers in the case that an entity fails the RSE in order to avoid potential reliability impacts.

We are optimistic that the “Interim Energy Assistance” concept shared by NV Energy during the February 23 meeting could provide an acceptable framework for facilitating such an option while still deterring any regular reliance on the EIM to solve capacity shortfalls.  It would be critical that adoption of such an “interim” solution must be revisited as part of the more holistic Phase 2 discussion on failure consequences and that in Phase 2 there should be an analysis of the frequency with which the “energy assistance” feature was used.

We thank NV Energy for putting a possible solution on the table and look forward to exploring a more holistic, long-term solution as part of Phase 2 of this process.  Thank you for the opportunity to comment.

1. Please provide your organizations openness towards a market option for an EIM Entity to elect to utilize supply that has been voluntarily-offered in the EIM, above the imbalance needs of the resource sufficient EIM Entities, to cure real-time energy emergencies.

Salt River Project Agricultural Improvement and Power District (SRP) considers allowing an EIM Entity to elect to utilize the EIM to cure energy emergencies a foundational change to EIM. EIM was not designed for this purpose and has operated with a “no leaning” principle. SRP and other EIM Entities work together during energy emergencies to cure them through the Southwest Reserve Sharing Group and Western Power Pool Reserve Sharing Program. Shifting this support to the EIM would be a significant operational change. SRP supports the exploration of options to expand the purpose of the EIM during such conditions (after the Balancing Authority Area [BAA] deploys existing tools), but this type of foundational change should require a robust stakeholder process. Additionally, the CAISO should not rush this type of change to the market. SRP believes that the current focus for this initiative should be determining failure criteria for emergency actions and, after those criteria are determined, then discuss the near-term consequence.

2. Please provide your organizations perspective on implementing financial consequences in the form of a hurdle rate, including any benefits or drawbacks from embedding these costs in an LMP.

SRP supports consideration of financial consequences as part of Phase 2 of the EIM Resource Sufficiency Evaluation (RSE) Enhancements initiative. However, SRP is concerned that this change to the EIM would disincentivize market participants from coming into the market whole, especially during tight system conditions.

3. Please provide your organizations perspective on relaxing EIM transfer limitations and applying an after-the-fact charge to incremental transfers, including any benefits or drawbacks from this method of implementation.

SRP supports consideration of financial consequences as part of Phase 2 of the EIM Resource Sufficiency Evaluation (RSE) Enhancements initiative. Participation in the EIM without sufficient capacity and ramping capability to meet expected load is currently considered “leaning.” SRP believes that additional dialogue is needed to design after-the-fact consequences in the event participants are allowed to lean on the market . Before implementing this type of change, SRP requests that the CAISO study potential impacts to the market and to participants that are following the current requirements for EIM participation.

SRP believes that there are substantial risks related to how such deficiencies are priced in the market.  Inclusion in the Locational Marginal Prices (LMPs) is necessary to provide local area signals for after-the-fact analyses and implementing broader policy changes. Out-of-market and after-the-fact actions create risk that such deficiencies will not contribute to longer-term corrections due to these actions generating a historical data set that lacks the full context.  However, utilizing LMPs alone would likely result in under compensation to resources that ultimately generate the additional energy the footprint needs to cure the deficiency, and would likely result in substantial compensation to adjacent BAAs, regardless of whether they directly contribute to incremental energy production. Given the complexity and risks, such an approach should be explored through more robust stakeholder discussions and processes with full understanding of the pros and cons. 

4. Please provide your organization’s comments on the concept of creating a backstop that triggers automatic failure of the RSE when preset conditions are met. To the extent that your organization agrees please provide comment on the viability of the following options:

SRP supports the concept of utilizing well-defined preset conditions to trigger failure of the RSE. SRP looks forward to continued discussion on this topic.

5. The revised draft finals proposal to create a backstop based on agreed upon emergency operator actions that correspond to resource insufficiency.

SRP supports the concept of a backstop based on agreed upon emergency operator actions but opposes the CAISO’s proposal that all EIM participants sign an attestation obligating them to notify the CAISO when they perform these emergency actions. The mechanism for the EIM Entity to inform the CAISO of emergency conditions should require no additional action from the EIM Entity. SRP is open to discussing this issue further.

6. The concept of utilizing the NERC EEA classifications as pre-defined metrics:

a. The potential benefits, and drawbacks of utilizing a NERC EEA 2 as the threshold. b. The potential benefits, and drawbacks of utilizing a NERC EEA 3 as the threshold.

SRP supports the concept of utilizing the NERC Energy Emergency Alert (EEA) classifications as a threshold to define a BAA Emergency. One potential drawback of using an EEA 2 that concerns SRP is the market defaulting a BAA to fail the RSE when it still has an opportunity to cure; however, SRP feels this concern could be mitigated by appropriately timing a freeze of EIM transfers. Any market actions should not compromise the reliability of the system and must be closely communicated between the market operator and the BAA. Each BAA should make every effort to cure the emergency conditions through traditional means. If a BAA declares an EEA 2 in the real time hour for which it has passed the RSE and shown sufficiency, the market should not freeze EIM transfers for that hour. The default failure and freeze of EIM transfers should be for the next target hour, which is under evaluation, if the BAA does not cure the situation.

7. Please provide additional comments on the WEIM Resource Sufficiency Evaluation Enhancements Phase 1 Emergency Actions Criteria Workshop not mentioned above.

SRP appreciates the CAISO’s workshop on WEIM Resource Sufficiency Evaluation Enhancements Phase 1 Emergency Actions Criteria. SRP agrees with the suggestion to separate the discussion of identification of RSE failure criteria from the discussion of failure consequences. SRP recommends the CAISO maintain its plan to evaluate failure consequences as part of Phase 2 of this initiative.

During the workshop CAISO staff and stakeholders shared various viewpoints for RSE enhancements during emergency actions. SRP is concerned that many of the suggestions would require not only robust stakeholder dialogue, but also long implementation times and development of new after-the-fact charge codes. In lieu of making fundamental changes to the EIM for summer 2022, SRP believes that the current focus for this initiative should be determining the criteria for emergency actions, and after those criteria are determined, then discuss the near-term consequence.

1. Please provide your organizations openness towards a market option for an EIM Entity to elect to utilize supply that has been voluntarily-offered in the EIM, above the imbalance needs of the resource sufficient EIM Entities, to cure real-time energy emergencies.

The Six Cities support consideration of a market option to enable EIM entities to access supply that has been offered into the EIM during (or to prevent) real time energy emergencies.  As a conceptual matter, the Six Cities do not believe that it is reasonable to deprive market participants of incremental access to surplus resources that have been voluntarily offered into the EIM during emergency conditions.  Development of sound rules governing such access should be a priority for the CAISO and stakeholders. 

During the February 23^rd stakeholder meeting, representatives for NV Energy articulated a proposal for enabling EIM participants to access EIM resources in emergency conditions, notwithstanding failure of the resource sufficiency evaluation.  The Six Cities concur that restricting access to incremental EIM transfers in emergency conditions could exacerbate reliability problems within a BA Area, and that so long as there is adequate surplus supply within the EIM to address temporary and localized supply deficiencies – especially conditions that are unavoidable, unforeseen, and rare – deficient BAs should have the ability to access additional supply so long as resource-sufficient BAs are not adversely impacted. 

The Six Cities appreciate that market participants may be understandably apprehensive about the possible risks of such a proposal, particularly if developed on an expedited basis.  The Six Cities agree that the potential for unintended consequences and adverse pricing impacts should be fully assessed prior to implementation.  More evaluation of these elements of the NV Energy proposal is needed, and the CAISO should work with stakeholders to develop further analyses as necessary to identify, address, and resolve concerns. 

Further development of any proposal to address emergency access should also follow certain principles:

• BAs that are resource sufficient should not be adversely affected as a result of enabling access to incremental EIM transfers by a resource deficient EIM participant.
• Settlements based on penalty prices for incremental access to EIM transfers should not impact market prices outside of the deficient BA Area. 
• Any proposal that may be adopted on an expedited basis for this summer should be applicable for an interim period pending the completion of Phase 2 of this initiative.  If implementation during the interim period is successful, the proposal could be made permanent or incorporated into Phase 2.

2. Please provide your organizations perspective on implementing financial consequences in the form of a hurdle rate, including any benefits or drawbacks from embedding these costs in an LMP.

 Please see the comments provided above in response to question no. 1.

3. Please provide your organizations perspective on relaxing EIM transfer limitations and applying an after-the-fact charge to incremental transfers, including any benefits or drawbacks from this method of implementation.

 Please see the comments provided above in response to question no. 1.

4. Please provide your organization’s comments on the concept of creating a backstop that triggers automatic failure of the RSE when preset conditions are met. To the extent that your organization agrees please provide comment on the viability of the following options:

 Please see the comments provided above in response to question no. 1.

5. The revised draft finals proposal to create a backstop based on agreed upon emergency operator actions that correspond to resource insufficiency.

 Please see the comments provided above in response to question no. 1.

6. The concept of utilizing the NERC EEA classifications as pre-defined metrics:

a. The potential benefits, and drawbacks of utilizing a NERC EEA 2 as the threshold. b. The potential benefits, and drawbacks of utilizing a NERC EEA 3 as the threshold.

The Six Cities support the use of an objective set of criteria that can be applied across EIM participants as a determination of when a BAA is resource-insufficient.  The Six Cities have previously expressed concerns with the use of operator actions as a metric for resource insufficiency, however, as that criterion appeared designed to address conditions particularized to the CAISO, and it did not appear to encompass a comparable set of operator actions that may be employed by other EIM entities to address similar circumstances.  In continuing to consider this issue, the Six Cities remain convinced that attempting to identify examples of operator actions that may be indicia of emergency circumstances is too subjective and will not result in a comprehensive set of conditions that can be supported by all or most stakeholders.

The Six Cities do agree that the NERC Energy Emergency Alert (“EEA”) rubric provides a set of objective criteria that could provide a framework for identifying the circumstances when an EIM BAA is resource insufficient.  There may be general consensus that entering an EEA 3 condition indicates resource insufficiency.  It is less clear that there is stakeholder consensus – at least among CAISO stakeholders – for the use of EEA 2 conditions as indicative of resource insufficiency.  The Six Cities understand that this is mainly because EEA 2 conditions trigger the CAISO’s access to Reliability Demand Response Resources (“RDRRs”), and it is not apparent that the use of these pre-procured resources under EEA 2 conditions should trigger EIM-related sufficiency consequences within the CAISO footprint.  The extent to which other EIM entities rely on comparable types of resources under similar conditions is unknown. 

At this time, more stakeholder work is needed to refine the applicable criteria for Emergency conditions and what may constitute resource insufficiency.  To the extent that identification of emergency conditions resulting in RSE failure is needed in the short term (i.e., prior to completion of Phase 2 of this initiative), then adoption of EEA 3 as a minimum level pending further refinement in Phase 2 would seem to provide a reasonable starting point. 

7. Please provide additional comments on the WEIM Resource Sufficiency Evaluation Enhancements Phase 1 Emergency Actions Criteria Workshop not mentioned above.

 The Six Cities have no additional comments at this time.

1. Please provide your organizations openness towards a market option for an EIM Entity to elect to utilize supply that has been voluntarily-offered in the EIM, above the imbalance needs of the resource sufficient EIM Entities, to cure real-time energy emergencies.

2. Please provide your organizations perspective on implementing financial consequences in the form of a hurdle rate, including any benefits or drawbacks from embedding these costs in an LMP.

3. Please provide your organizations perspective on relaxing EIM transfer limitations and applying an after-the-fact charge to incremental transfers, including any benefits or drawbacks from this method of implementation.

4. Please provide your organization’s comments on the concept of creating a backstop that triggers automatic failure of the RSE when preset conditions are met. To the extent that your organization agrees please provide comment on the viability of the following options:

5. The revised draft finals proposal to create a backstop based on agreed upon emergency operator actions that correspond to resource insufficiency.

6. The concept of utilizing the NERC EEA classifications as pre-defined metrics:

a. The potential benefits, and drawbacks of utilizing a NERC EEA 2 as the threshold. b. The potential benefits, and drawbacks of utilizing a NERC EEA 3 as the threshold.

7. Please provide additional comments on the WEIM Resource Sufficiency Evaluation Enhancements Phase 1 Emergency Actions Criteria Workshop not mentioned above.